On April 30, Year 1, Tilton Products purchased machinery for $198,000. The useful life of this machinery is estimated at 8 years, with an $18,000 residual value. Tilton uses a calendar year-end for financial reporting.

Assume that in its financial statements, Tilton Products uses the 200%-declining-balance method and the half-year convention. Depreciation expense in Year 1 and Year 2 will be:

Multiple Choice

• $49,500 in Year 1 and $43,313 in Year 2.

• $49,500 in Year 1 and $37,125 in Year 2.

• $24,750 in Year 1 and $43,313 in Year 2.

• $24,750 in Year 1 and $49,500 in Year 2.

On April 30, Year 1, Tilton Products purchased machinery for $88,000. The useful life of this machinery is estimated at 8 years, with an $4,000 residual value. Tilton uses a calendar year-end for financial reporting.

Assume that in its financial statements, Tilton Products uses the 150%-declining-balance method and the half-year convention. Depreciation expense in Year 1 and Year 2 will be:

Multiple Choice

• $15,750 in Year 1 and $13,547 in Year 2.

• $16,500 in Year 1 and $14,953 in Year 2.

• $16,500 in Year 1 and $16,500 in Year 2.

• $8,250 in Year 1 and $14,953 in Year 2.

An asset that costs $28,000 and has accumulated depreciation of $10,600 is sold for $15,700. What amount of gain or loss will be recognized when the asset is sold?

Multiple Choice

• A loss of $1,700.

• A gain of $12,300.

• A gain of $1,700.

• A loss of $12,300.